Owning a franchise is often viewed as the perfect balance between entrepreneurship and support. It offers a proven system, brand recognition, and the potential for financial independence. However, behind every dream of business ownership lies a dense web of legal obligations. As highlighted in the conversation between Stacey Riska and Kelly Spann, understanding these legalities is not optional — it’s essential.
⚖️ The Role of a Franchise Attorney
A franchise attorney serves as both a translator and protector. Franchise agreements and Franchise Disclosure Documents (FDDs) can run hundreds of pages, filled with complex legal language. Kelly Spann, an attorney with over two decades of experience, explains that her role isn’t just about reading contracts — it’s about interpreting the relationships, rights, and responsibilities they create.
Unlike general contract law, franchise law involves unique dynamics. For instance, a single clause might seem harmless on its own but could become restrictive when combined with others. A specialized attorney identifies these interdependencies and helps clients avoid signing documents that could lock them into disadvantageous or even predatory relationships.
🚩 Red Flags in Franchise Agreements
Kelly shares that not all franchisors operate ethically. She emphasizes the importance of recognizing red flags early on, such as:
Ongoing or recent litigation listed in Item 3 of the FDD.
Lack of experience among the franchisor’s leadership.
Misleading claims about franchise regulation or financial performance.
Franchisors who discourage legal review, labeling attorneys as “deal breakers.”
One shocking revelation is that franchise regulation in the U.S. is minimal. The only federal rule, the FTC Amended Franchise Rule, requires certain disclosures — but violations often go unpunished. This means that due diligence and professional advice are the buyer’s only true safeguards.
📑 Timing and Process of Legal Review
Prospective franchisees should consult an attorney as soon as they receive the FDD. The law requires a 14-day cooling-off period before signing, but Kelly recommends using this time to:
Thoroughly read the FDD.
Schedule a consultation with a franchise attorney.
Ask questions about unclear terms or obligations.
Request an analysis of potential risks or negotiable clauses.
💬 Negotiation: It’s Possible and Often Necessary
Many franchisors insist that their agreements are “standard” and “non-negotiable.” However, Kelly debunks this myth. While older, established franchises might offer less flexibility, newer or growing franchises are often open to negotiation — especially when it comes to:
Territory size and exclusivity.
Royalty or marketing fees.
Termination and renewal rights.
Performance expectations.
Understanding what’s negotiable requires expertise and tact. Kelly notes that franchising is a long-term partnership, not a one-sided transaction — much like a marriage. Both sides benefit from clarity and mutual respect.
Many franchisors insist that their agreements are “standard” and “non-negotiable.” However, Kelly debunks this myth. While older, established franchises might offer less flexibility, newer or growing franchises are often open to negotiation — especially when it comes to:
Territory size and exclusivity.
Royalty or marketing fees.
Termination and renewal rights.
Performance expectations.
Understanding what’s negotiable requires expertise and tact. Kelly notes that franchising is a long-term partnership, not a one-sided transaction — much like a marriage. Both sides benefit from clarity and mutual respect.
💔 The Cost of Neglecting Legal Counsel
Kelly recounts heartbreaking cases of franchisees who lost their life savings — and even their families — due to bad franchise investments. Many fell prey to predatory systems that used gaslighting, misinformation, or unrealistic promises. In extreme cases, she’s seen clients face bankruptcy or mental health crises as a result of these deals.
These tragedies underline the importance of doing proper due diligence before signing. Spending a few thousand dollars on legal review can prevent losses in the hundreds of thousands.
Kelly recounts heartbreaking cases of franchisees who lost their life savings — and even their families — due to bad franchise investments. Many fell prey to predatory systems that used gaslighting, misinformation, or unrealistic promises. In extreme cases, she’s seen clients face bankruptcy or mental health crises as a result of these deals.
These tragedies underline the importance of doing proper due diligence before signing. Spending a few thousand dollars on legal review can prevent losses in the hundreds of thousands.
💡 Building a Healthy Franchise Relationship
A successful franchise partnership thrives on communication, transparency, and trust. Miscommunication is often the root cause of disputes, and attorneys like Kelly act as mediators — helping both sides understand each other’s perspectives. When handled properly, legal counsel doesn’t break deals; it strengthens them.
🔍 Key Takeaways
Hire a specialist – Franchise law is not general contract law.
Start early – Consult an attorney once you receive the FDD.
Be cautious of red flags – Especially litigation, lack of regulation, or pushy sales tactics.
Don’t assume contracts are standard – Many terms can be negotiated.
Value transparency – A good relationship with your franchisor depends on honesty and communication.
🧭 Investing in a franchise can be a powerful step toward financial freedom — but only if approached with full awareness. As Kelly Spann wisely states, “Your job is to plan for success. My job is to plan for everything that could go wrong.” By combining optimism with legal diligence, franchisees can confidently pursue their entrepreneurial dreams while protecting their future.
Hire a specialist – Franchise law is not general contract law.
Start early – Consult an attorney once you receive the FDD.
Be cautious of red flags – Especially litigation, lack of regulation, or pushy sales tactics.
Don’t assume contracts are standard – Many terms can be negotiated.
Value transparency – A good relationship with your franchisor depends on honesty and communication.
What's Your Next? - Podcast
 | Author BioI’m Stacey Riska aka “Small Business Stacey”, your franchise placement specialist. I help aspiring business owners find the PERFECT franchise so they can get to the next level in life and business. |
